SHORT TERM: morning dip then rally, DOW +93
Last night, after the close, the FED issued the following press releases: http://www.federalreserve.gov/newsevents/press/bcreg/20120607a.htm, and http://www.federalreserve.gov/newsevents/press/bcreg/20120607b.htm. Overnight the Asian markets lost 0.9%. European markets were lower losing 0.3%. US index futures were lower overnight as well. At 8:30 the Trade deficit was reported lower: -$50.1 bln vs -$51.8 bln. At the open the SPX traded at 1312, then dipped down to 1308 in the first few minutes. The market had closed at SPX 1315 yesterday. After the early decline the market started to rally. At 10:00 Wholesale inventories were reported higher: +0.6% vs +0.3%. The rally continued all day long, with small 3 point pullbacks, right into a SPX 1326 close.
For the day the SPX/DOW were +0.80%, and the NDX/NAZ were +0.95%. Bonds gained 4 ticks, Crude dropped 55 cents, Gold added $3.00, and the USD was higher. Support for the SPX remains at the 1313 and 1303 pivots, with resistance at the 1363 and 1372 pivots. Short term momentum dipped to just above oversold and then began to rise. Last night the FED reported a slight increase in the Monetary base, but a slight decline in the M1 multiplier. Today the WLEI was reported higher: 48.7% vs 48.0%.
The market was under selling pressure last night. But it opened moderately lower, dipped down to last night’s lows, and then began to rally. The low was SPX 1308, which was precisely between the OEW 1303 and 1313 pivot ranges. This decline represents a 21 point drop from thursday’s high at SPX 1329, after a 62 point rally from monday’s 1267 low. This type of activity looks quite normal, for this bull market, during an uptrend. Next, providing the pullback is over, we would expect the market to rally past SPX 1329 and head toward the OEW 1363 pivot. Thus far it looks like the market may have completed Minor waves 1 and 2 of Intermediate wave one.
We also just had a WROC buy signal. These signals usually occur at the beginning of uptrends, are 90% reliable, and the more the signals the greater the trend. Our previous buy signal, was a double, which occurred in December 2011. Short term support remains at the 1313 and 1303 pivots. Resistance is now at SPX 1328/35 and 1342/47. Short term momentum is rising, and ended just overbought. The short term OEW charts remain positive with the negative swing point now at about SPX 1307. Enjoy your weekend!
MEDIUM TERM: downtrend may have bottomed
LONG TERM: bull market